Question

China's reliance on infrastructure spending to drive overall investment hit a new high in 2017. Chinese economic planners have turned more heavily to infrastructure as stimulus since​ 2015, preferring this approach over further investment in​ manufacturing, where earlier stimulus brought excess capacity in steel and coal. Stimulus spending is bringing increased government debt. Is the stimulus described in the news clip discretionary or​ automatic?

The stimulus described in the news clip is​ ______ because it is a​ ______ of Chinese economic planners.    
A. ​automatic; policy choice
B. ​automatic; an automatic response
C. ​discretionary; policy choice
D. neither discretionary nor​ automatic; a decision

Answer 1

C. discretionary; policy choice

This is because it is not an automatic or obvious fiscal approach to spend exorbitantly on infrastructure from the government funds, rather the government has consciously through majority support decided to spend on infrastructure so as to mitigate the negative implications of excess capacity of steel and coal.

Again this is a policy choice to keep the prices in coal and steel market stable and not an automatic fiscal response.